Wheat stocks balloon even as storage infrastructure creaks

Written by Sandip Das | New Delhi | Updated: Mar 12 2013, 09:11am hrs
Just few weeks before the commencement of the wheat procurement drive for the current season (2013-14), the government has wheat stocks in excess of 27 million tonne at the start of the month, which is far above requirements.

Compared with the strategic reserve and buffer stock norm of 4 million tonne and 3 million tonne respectively, the government's wheat reserves are far higher, something that is expected to put enormous pressure on the Food Corporation of India (FCI) and state government-owned agencies to create space for the purchasing new crop.

The official wheat procurement for the current season starts from April 1. The government has set a record target of 44 mt for the current year against last year's purchase of close to 39 mt.

On March 1, the total foodgrain stock (mostly consisting wheat and rice) with FCI was reported at more than 62 mt against the norm of only 21 mt.

Official sources told FE that because of huge volumes of procurement during the last couple of years, more than 10 million tonne of grains (mostly consisting of rice and wheat) would have to be kept in cover and plinth (CAP) facilities of the FCI, where the grain cannot be stored for long periods.

The government is anticipating wheat stocks of 57 mt at the start of June this year following a record purchase from the farmers during 2013-14.

Sources said government agencies had been hiring rented places to store foodgrains for dealing with the huge storage crunch faced by the FCI and government-owned agencies. These agencies have a total storage capacities of about 61 million tonne. This includes 18 mt of CAP capacity.

In June last year, food grain stocks reached their peak at 81 mt. This year, too, the FCI is expected to face a huge storage crunch in the coming few months, an official said.

In anticipation of a huge rise in wheat procurement in Madhya Pradesh, the government has announced a higher procurement target despite a marginal fall in the country's key food grain output by 2.6 mt to 92.3 mt.

A food ministry official said that due to a bumper wheat output of 16.2 mt for Madhya Pradesh, this year, the central Indian state is expected to increase its purchase to 13 mt from 8.5 mt. This is a significant jump of more than 52%.

With a surge in procurement during the last few years, Madhya Pradesh is all set emerge as the second biggest contributor of wheat to the central pool this year, surpassing Haryana.

The traditionally key wheat-growing states of Punjab and Haryana are aiming at procuring 14 mt and 7.8 mt, respectively, this year while last year purchase swere to the tune of 12.8 mt and 8.6 mt, respectively. Uttar Pradesh is set to contribute 5 mt to the wheat procurement drive.

Around 5 million tonne of grain is distributed monthly in different states under the Targetted Public Distribution System (TPDS), allocated to armed forces and social sector schemes besides keeping stocks.

Mainly because of a bumper grain output during the last few years, the government has been keeping more grain than required under the strategic reserve and buffer stocks norms. Due to an open procurement policy, the FCI has been lifting grain from all farmers, leading to huge stocks.